Campbell Robb, chief executive of housing charity Shelter, said: “Soaring housing costs have left millions of people stuck in a rent trap and struggling to save anything towards a home of their own.

“The Help to Buy ISA only helps the lucky few who are better off, or able to live with their parents while they save for a deposit. For the vast majority of renters who want to move forward in life and put down roots, this scheme brings them no closer to that dream.

“If the government genuinely wants to help the nation’s renters get a foot on the housing ladder, it needs to look beyond quick-fix schemes, and invest in homes that people on ordinary incomes can actually afford.”

A Treasury spokesman said: “The Help to Buy Isa scheme was introduced to support those that are struggling to save enough to get onto the housing ladder. The property price cap allows the government to target support at those who are saving to buy their first home.”

He added that by March 2016 more than 150,000 people had used the government’s other Help to Buy equity loan and mortgage guarantee schemes.

Analysis, Richard Donnell, Hometrack

The cap on purchase prices for a Help to Buy Isa should encourage house builders to develop smaller homes, a property expert says.

Richard Donnell, research and insight director from Hometrack, said: “In order to appeal to a wider group of buyers, builders need to start building smaller houses to offer at the lower price point to help first time buyers get on the housing ladder.

“There is a lack of supply of two-bedroom homes and this keeps the price gap narrow and relatively close to three-bedroom home prices.”

Hometrack figures, based on prices paid for homes between June 2015 and January 2016, show how prices for two-bedroom homes at the higher end of the range cost as much as or more than the lowest-priced three-bedroom properties in the same area.

In Elmbridge in Surrey, an average two-bedroom home in the upper price range went for an average of £459,963, while a lower range three-bedroom home sold on average for £430,000.

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